1/4% Tax on all stock trades pushed in NY Times today

[FB123]

Quote from gkishot:

Why would futures get a break?

Because even the proponents of the tax have mentioned that the futures would be taxed differently, that's why. I heard one guy mention 1/10 of the normal suggested tax rate.

In what sense they are different from stocks?

In the sense that they are extremely highly leveraged, like options. You can't make someone pay $5.00 to buy an at the money call on a $50 stock and then tax them 0.001% of the entire value of the underlying stock on that call, because that would be a tax of $50 on something that only cost $5.00 to buy in the first place! Similarly, you can't tax futures at the value of the underlying instrument because they are also highly leveraged.

Position size that what counts for your PnL as well as for the government's PnL.
Why should the government be concerned with your leverage? They won't.

Of course they will. A $250 R/T tax would increase the cost of doing business on the CME by 50 TIMES. That is a 5000% increase in the cost of getting in and out of a position. If they do that, the CME shuts down the next day as revenue and trade volume literally drops to ZERO. Nobody is going to buy a contract on the S&P 500 if it has to move 5 full handles just to get you to break even. That's why it's not even remotely going to happen, period. Use your head.

 

[Wayne Gibbous]

Quote from FB123:

Because even the proponents of the tax have mentioned that the futures would be taxed differently, that's why. I heard one guy mention 1/10 of the normal suggested tax rate.



In the sense that they are extremely highly leveraged, like options. You can't make someone pay $5.00 to buy an at the money call on a $50 stock and then tax them 0.001% of the entire value of the underlying stock on that call, because that would be a tax of $50 on something that only cost $5.00 to buy in the first place! Similarly, you can't tax futures at the value of the underlying instrument because they are also highly leveraged.



Of course they will. A $250 R/T tax would increase the cost of doing business on the CME by 50 TIMES. That is a 5000% increase in the cost of getting in and out of a position. If they do that, the CME shuts down the next day as revenue and trade volume literally drops to ZERO. Nobody is going to buy a contract on the S&P 500 if it has to move 5 full handles just to get you to break even. That's why it's not even remotely going to happen, period. Use your head.

You are making the wild assumption that our esteemed lawmakers have even the remotest idea of how markets and trading work, and how taxes like that would screw up our business for a long time.

All those bozos see is how "high frequency trading" and "speculators" and "Wall Street Greed" "caused" all of our problems. Dumb, I know, but that's the DC Krew...

 

[FB123]

Quote from Wayne Gibbous:

You are making the wild assumption that our esteemed lawmakers have even the remotest idea of how markets and trading work, and how taxes like that would screw up our business for a long time.

That is not a wild assumption, that is a reasonable assumption. Just because we have a crazy crackpot or two like DeFazio, doesn't mean that all of them are literally insane. It's one thing to implement a marginally bad policy, it's another thing to implement a policy that can do nothing but the exact opposite of what you intend, and literally destroy an entire industry in one day. Even if the majority of them were stupid enough to not know this (and they're not), the powers that be in the financial industry would quickly explain it to them. This is why only stupid unions like the AFL-CIO and nutjobs like DeFazio support this right now, because they really are that ignorant. Besides, you're absolutely losing this argument. The point is that even proponents of the tax have said that futures would be treated differently.

All those bozos see is how "high frequency trading" and "speculators" and "Wall Street Greed" "caused" all of our problems. Dumb, I know, but that's the DC Krew...

Which is why some of them want a tax. Like I said, a $10 tax on a futures RT is one thing (and is incredibly destructive, but at least possible), but a $250 RT is out of the question. It would cause the exchange to cease to exist, and the resulting tax revenue from that would be zero. It would actually be net tax negative, because of all the lost jobs. Some of them might be kind of dumb, but nobody is THAT dumb.

 

[gkishot]

Quote from FB123:

Because even the proponents of the tax have mentioned that the futures would be taxed differently, that's why. I heard one guy mention 1/10 of the normal suggested tax rate.



In the sense that they are extremely highly leveraged, like options. You can't make someone pay $5.00 to buy an at the money call on a $50 stock and then tax them 0.001% of the entire value of the underlying stock on that call, because that would be a tax of $50 on something that only cost $5.00 to buy in the first place! Similarly, you can't tax futures at the value of the underlying instrument because they are also highly leveraged.



Of course they will. A $250 R/T tax would increase the cost of doing business on the CME by 50 TIMES. That is a 5000% increase in the cost of getting in and out of a position. If they do that, the CME shuts down the next day as revenue and trade volume literally drops to ZERO. Nobody is going to buy a contract on the S&P 500 if it has to move 5 full handles just to get you to break even. That's why it's not even remotely going to happen, period. Use your head.

Futures are extremely leveraged? Another good reason to hit them with the tax to curtail excessive leverage plaguing the Wall Street. Besides stocks can be leveraged as well: portfolio margin comes to mind.

 

[FB123]

Quote from gkishot:

Futures are extremely leveraged? Another good reason to hit them with the tax to curtail excessive leverage plaguing the Wall Street. Besides stocks can be leveraged as well: portfolio margin comes to mind.

How can you not understand this? This is SO simple. Do you SERIOUSLY believe that one single person in the entire world would place a trade on the S&P 500 e-mini if the RT cost was $250. ONE PERSON???

It would have to move 26 TICKS, or over 5 HANDLES to get you to break even. That is the ENTIRE DAILY RANGE on some days. Would ANYBODY do this? EVER?

No.

The e-mini is the largest traded instrument on the CME, and gives them a huge portion of their revenues. Along with bonds, it makes up probably 80% of all the trade volume (that's a pure guess in my part as I am too lazy to do the the math, but it's something like that). All of the volume would disappear, except for a few exempt hedgers trading to each other in the commodities. That's it. Everything else would be gone. The exchange would be gone. No more trades = no more revenue = no more CME. They would get no taxes from it, because there would be no trading.

Seriously guys, this is like grade 2 logic. Use your brains.

 

[taclander]

Quote from gkishot:

Futures are extremely leveraged? Another good reason to hit them with the tax to curtail excessive leverage plaguing the Wall Street. Besides stocks can be leveraged as well: portfolio margin comes to mind.

Is all that needs to be done is changing margin requirements. On the futures side no $500/contract margins. A minimum $2500 would be fine with me, and in reality $5000- $10,000 might actually get some of the new people to take it more serious at the outset instead of after they blow through $10,000 or $20,000 dicking around with multiple contracts before they know what the hell they are doing. Same could be applied to equities, lower leverage available. In both cases, instead of blaming and screwing us little guys who make a living trading, actually enforce the regulations and make the SEC staff do their job or fire their asses. Most of the crap that happened the SEC knew was going on, but let it go either from laziness, or good payola, look the other way funny business.
All another f--king tax does is give Congress more money to steal for other pet projects. It won't make it all better. It will just pick my pocket, so we can have more government employees to do the jobs of other government employees who aren't doing their job.
In other words piss off with more taxes, I pay enough all ready. I all ready pay a SEC fee when I sell securities, I pay taxes on profits. In case you can't guess, it really irritates the hell out of me when people throw out "we need to tax" this or that everytime something happens. The taxes are all ready there to pay for everything and then some. Call your Congressshithead and tell them to quit stealing your tax money. Make them act responsibly with your money, and quit picking your pockets and mine.
I need to get a government job and quit working for a living.

 

[gkishot]

Quote from FB123:

How can you not understand this? This is SO simple. Do you SERIOUSLY believe that one single person in the entire world would place a trade on the S&P 500 e-mini if the RT cost was $250. ONE PERSON???

They don't care. They want you to "buy & hold" stocks and get yourself a real job.
You are mistaking if you think they want your business. Quite the contrary.

 

[FB123]

Quote from gkishot:

They don't care. They want you to "buy & hold" stocks and get yourself a real job.
You are mistaking if you think they want your business.

Uhhh... no. If you think they are going to destroy the entire futures industry in the United States for the reasons that you said, you are smoking crack. For one thing, the big financial players will not allow it as it will cost them money. And as I said, even the proponents of the tax are saying that futures are treated differently, so there is pretty much nobody on your side on this argument, not even the people who want the tax. And who the heck are "they" anyways? DeFazio? The AFL-CIO? There is nobody of any consequence in government that has come out in support of this tax at all, and nobody in the entire world (other than you and couple of other people on this board) has even suggested taxing futures based on the value of the underlying contract. You are just running with nothing here. But believe what you want... I can see it's pointless to argue.

 

[MohdSalleh]

Quote from Stok:

Sheeshh....Erin sounds like she really wants this tax...and damn, this tax hurts even a swing trader who trades 2-3 times a MONTH!! It will take up to 50% of profits away. IT'S INSANE!!!!!!!!!!!!!!!!!!!

I had to turn it off.

LOL why would erin burnett care abt you?

she simply collects her paycheck and goes home to fuck her american-chinese citibank boyfriend high yield trader every evening

 

[FB123]

Quote from MohdSalleh:

LOL why would erin burnett care abt you?

she simply collects her paycheck and goes home to fuck her american-chinese citibank boyfriend high yield trader every evening

Wait a minute - she's dating a TRADER? And she's still spewing crap about a trading tax every day? How can this guy not be talking some sense into her??